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The Cost of Donating Artwork: Can Artists Afford to Donate Their Own Artwork?

By Emma Kleiner

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Sample press release about a gift (2011 The Philadelphia Museum of Art).

At the Tucson Medical Center in Tucson, Arizona, the Healing Art Program’s mission is to fill the hospital with art that lifts the spirits of the patients and creates a serene environment. Lauren Rabb, the Curator of the Healing Art Program, manages that task, which includes arranging works from the hospital’s private collection and searching for new donations. It may seem curious, then, that when Rabb began her work at the Hospital she would not consider asking an artist to donate his or her own work. To professionals in the art world this hesitance makes sense: unlike art collectors, who are incentivized to donate artwork because they may deduct the fair market value of the work from their taxable income, artists may only deduct the value of their supplies – which likely amounts to the negligible cost of paper, brushes, and paint. In an interview for Center for Art Law, Lauren Rabb, who once also owned a gallery and worked as a museum curator, stated: “Everyone in the art world has come into contact with this [tax provision].”

Under § 170 of the Internal Revenue Code of 1986 and § 1.170-1(c)(1) of the Code of Federal Regulations, when a taxpayer makes a charitable contribution of tangible property, including artwork, he or she may deduct the fair market value of that tangible property from his or her taxable income. The law is designed to provide an incentive to collectors to donate artworks to nonprofit educational institutions such as museums and libraries. However, as a result of the passage of the Tax Reform Act of 1969, “creators,” such as artists, writers, and choreographers, are excluded from this tax provision. Instead, creators may only deduct the cost of their supplies from their taxable income. Thus, while collectors may be motivated to donate artwork due to the favorable tax benefits, artists are asked to give away their artwork essentially for free.

The origin for the disparate treatment of artists and non-artists dates back to the 1960s, when Congress was galvanized to close a perceived loophole after public officials and politicians capitalized on their status as creators of their own papers and manuscripts. Presidents Truman through Johnson reaped very favorable tax benefits when donating their presidential papers. Supporters of the Tax Reform Act of 1969 derided the ability for public officials and politicians to deduct the fair market value of their papers – papers that arguably belonged to the public in the first place. The timing of this reform put President Nixon’s donation of a portion of his vice presidential papers in 1969 at risk. President Nixon’s Vice Presidential papers were valued for tax purposes at $576,000, which appeared to be a very favorable appraisal to many observers, even exceeding Nixon’s gross income for 1970. To take advantage of the pre-1969 tax break though, Nixon backdated the deed transferring title of his papers. That deduction helped to reduce his taxable income to zero – in fact, the $792 he paid in taxes in 1970 was a result only of the alternative tax minimum. In passing the Tax Reform Act of 1969, Congress was concerned that if they failed to close this loophole, other creators would take advantage of the tax provision allowing for a deduction of fair market value of their works. Notably, these examples relate to documents and written materials rather than works of visual art.

The effect of the revision of the Internal Revenue Code in 1969 was immediate: donations of works, including artwork, manuscripts, and other scholarly collections, by their creators came to a halt. For example, in the three years prior to 1969 the Museum of Modern Art in New York received 321 donations from artists, but in the three years after 1969 the Museum received only 28 donations from artists. Strikingly, the Library of Congress, which customarily received around 15 donations from authors per year, received one donation in the four years after 1969. The National Archives, within just days of the passage of the Tax Reform Act of 1969, noted a visible decline in gifts of papers made to the government.  

This trend was particularly significant for museums and libraries, which depend on the public to a large extent to grow their collections. Museums, which must rely on their endowment and funds to support their staff and the costs of running a museum, need donations to grow their collections. It is estimated by the Performing Arts Alliance that 80% of objects in U.S. museums arrive as donations. Furthermore, the connection between donations and tax benefits is clear. In Artful Ownership, author and attorney Aaron Milrad wrote, “Historically, most museums and public institutions have received their finest works through donations[,] . . . [and] the donations are made, at least in part, for the tax benefits available to the donor.” Today, because of the insignificant tax break for donating artwork, artists often sell work that they would otherwise consider donating to a cultural institution or nonprofit, and the public is thus denied the benefit of that art.

Although the possibility for valuation abuse that spurred support for the Tax Reform Act of 1969 will always exist, there are many reasons to believe that deceptive or exaggerated valuations are not likely to occur and that Congress could safely adopt a measure restoring the law to its pre-1969 condition. The Senate currently has such a bill in front of it: the Artist-Museum Partnership Act (“the Act”). The Act, proposed by Senator  of Vermont, would give artists the ability to deduct the fair market value of their works while providing additional safeguards to prevent any abuse of the tax provision.

The Act has been introduced in the Senate seven times since 2000, most recently on April 14, 2015, but it has not gained much traction or become law. To reduce the ability for creators to take advantage of a tax provision allowing for the deduction of their donated works at fair market value, a qualified appraiser must determine the fair market value of the tangible property. Moreover, the tangible property must be created no less than 18 months prior to the contribution, which stops an artist from creating and donating a piece of tangible property in quick succession simply to gain a tax advantage. Finally, the Art Advisory Panel at IRS, which was established in 1968 to help IRS review the fair market value of works of art, should also help to curb any appraisals of art that raise red flags. Given these safeguards, such “phantom abuses” should not prevent the United States from supporting creators in their artistic work.

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Note credit line of the controversial Rauschenberg work that includes a stuffed bold eagle. MoMA.

Amending the IRC by passing the Act or comparable legislation would be one step towards rectifying the unfairness with which artists and other creators have been treated for the past decades and undoing the harm to museums, libraries, and other institutions that have limited acquisition funds. It would serve the fundamental goal of generating public access to the arts and helping museums grow their collections. In advocating for passage of the Artist-Museum Partnership Act, Senator Leahy stated: “We have a lot of contemporary artists in this country who have this artwork, and ultimately the public wins. The public gets to see artwork they might not have seen otherwise, unless they were visiting somebody who’s a private collector.”

At present, by disallowing the deduction of the fair market value of artwork when donated by its creator, the Internal Revenue Code creates a schism between taxpayers where there should be none. It is only fair that collectors and creators, who are identical taxpayers and donate the same types of works, receive the same tax benefit of a donation.

Note: For this interview, author interviewed Lauren Rabb, Curator of the Healing Art Program at Tucson Medical Center in Tucson, Arizona. More information about the Program is available on their website:


*About the Author: Emma Kleiner is a student at Stanford Law School. She can be reached at

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. Instead, readers should seek an attorney.